We made a very bad deal. That's the verdict of this informative, but frustrating story by Leah McGrath Goodman at Newsweek on the history of private oil and gas drilling on public lands owned by the US taxpayer:
How bad is it?
Americans may be surprised to learn that although leases on taxpayer-owned territories can fetch thousands of dollars an acre in the competitive bidding process, the starting bid for an annual lease to explore for 10 years is just $2 an acre. (That is not a typo.) Put it this way: America charges less for drilling on an acre of taxpayer-owned land for a decade than Starbucks charges for a cup of coffee. According to the Bureau of Land Management, the arm of the U.S. Department of the Interior that manages land leases, there are no plans to change that.
If you factor in inflation, the spending power of $2 in 1987 is the equivalent of 50 cents today, according to the U.S. Bureau of Labor Statistics. So, even as energy prices skyrocket, the nation is charging Big Oil a quarter of what it did 30 years ago.
McGrath Goodman writes that the ultimate sucker punch is that we're giving our public resources away and then asking Big Oil to sell it back to us at top dollar.
So just how much are Americans being cheated out of? Let's just say taxpayers aren't just giving away their natural resources, they're paying Big Oil to haul them away.
In 2012, the U.S. gave away 120.8 million barrels of oil, based on Office of Natural Resources Revenue data, worth more than $10.44 billion if costed at the average oil price for that year. It also gave away 197 million cubic feet of natural gas. In total, these deals wiped out what the nation earned for all its natural resources combined. The same year, Americans got socked with $3.60 a gallon at the pump, the nation's highest-ever average gasoline price.
The previous year, 2011, America did one better: It didn't just give away what it earned – it put itself in a substantial deficit giving to Big Oil 136.9 million barrels of oil with a price tag of $11.92 billion. The oil giveaways alone that year far exceeded the lease and royalty revenue paid by Big Oil to Americans for exploiting their natural resources. Taxpayers also gave up 258.6 million cubic feet of natural gas, worth at least another billion dollars.
What's even more mind-boggling about all of this is that despite the realities of how good things have been for fossil fuel companies in recent years, people on the right still claim that President Obama is anti-drilling, anti-oil and totally in-line with the environmentalists. Far from it. Sure, he's taken executive action that attempts to address climate change, but if he and Democrats were as radical as some people think they are, we'd be seeing either an end to all drilling and mining on public lands or a nationalization of the process, with royalties coming back to the taxpayer instead of filling the pockets of Big Oil.
The whole piece is worth a read (and beautifully designed). Read the rest.